Wednesday, March 29, 2006

Fifth Circuit Holds 60-Day Period for Ruling on Merits of CAFA Appeal Begins with Order Granting Leave to Appeal

Per Patterson v. Dean Morris, L.L.P., --- F.3d ----, 2006 WL 711445 (5th Cir. Mar. 22, 2006):

This appeal come to us under the Class Action Fairness Act of 2005 (“CAFA”), Pub.L. 109-2, 119 Stat. 4 (2005). We have motions to decide before briefing is completed on the merits. Because of CAFA's limitations on the period of time in which we must rule on the merits of the appeal, we need to determine whether that period begins with the filing of the petition for leave to appeal or, instead, with our order granting leave to appeal. We conclude that the time runs from the order.

. . .

The plain language of § 1453(c)(1) and (2) is that a court of appeals has the option to “accept” an appeal that is sought under CAFA from an order granting or denying a motion to remand to state court. Naturally this indicates the appeal is discretionary with the court of appeals, which may reject it by denying the petition for permission to appeal, in which case there is (and never was) an appeal in the usual sense.

By this easy reading, a requested appeal under CAFA is subject to Federal Rule of Appellate Procedure 5, which governs (and is entitled) “Appeal by Permission.” Importantly, rule 5(d)(2) says that “[a] notice of appeal need not be filed. The date when the order granting permission to appeal is entered serves as the date of the notice of appeal for calculating time under these rules.”

This subsection leads us to the conclusion that it is the order granting leave to appeal that triggers the sixty-day period for a court of appeals to enter judgment. That is the result reached in a recent, careful opinion, on which the dissent also relies, in Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Servs., Inc., 435 F.3d 1140 (9th Cir.2006). That court persuasively concluded that “in enacting § 1453(c)(1) Congress intended to mirror the procedures for taking an appeal pursuant to [28 U.S.C.] § 1292(b).” Id. at 1145. As that court reasoned, it follows that “a party seeking to appeal under § 1453(c)(1) must comply with the requirements of [rule] 5.” Id.

By reference to § 1292(b) and rule 5, the Ninth Circuit observed that “Congress chose in the language of the statute to require the filing of an ‘application,’ the same word used in § 1292(b), not a ‘notice of appeal.’ ” Id. The distinction is important: When a party files a notice of appeal, there is, at that very point in time, an appeal, albeit one that may later be subject to dismissal for jurisdictional or procedural insufficiency. Where, however, a party “applies” for leave to appeal, or “seeks permission” to do so, there is logically no appeal until the court vested with the authority to grant or deny leave has done so.

One objection the dissent raises to recognizing the order granting leave to appeal as the trigger for counting the sixty days is that by delaying a decision on whether to grant leave to appeal, a court of appeals might be able to extend its “consideration” of the case indefinitely. One device for so doing would be to entertain full merits briefing (and maybe even oral argument), then issuing an opinion or order that either (1) denies leave to appeal based on an evaluation of the merits of the class certification issue or (2) grants leave to appeal and, in the same order or opinion, rules on the merits. Such a procedure arguably would circumvent the evident will of Congress to have CAFA appeals on remand issues decided on an exceptionally tight schedule.

The fact is, however, that abuse can occur under either interpretation of the sixty-day limit. If the period begins with the filing of the motion for permission to appeal, a court of appeals might choose just to “sit” on the motion without ever ruling, content in the knowledge that after sixty days, the appeal will disappear by operation of law, and the court will never have to consider the merits.

The better view is to trust the integrity of the courts of appeals to recognize the Congressional directive to handle CAFA appeals expeditiously and in good faith. The reading we adopt allows 60 days (or 70 or more, if extended) for the court to consider the actual merits of the certification question, aside from the issue of whether an appeal is justified in the first place as a discretionary matter.

This reading of the statute provides enough time for the orderly filing of the briefs, albeit on a schedule much shorter than that normally used in federal appeals. It also allows, where appropriate, time for oral argument. It is not unreasonable to assume that Congress intended to permit at least this amount of time to ensure thorough review of remand issues.

. . .

In summary, we conclude that in a CAFA appeal under § 1453, the sixty-day period (or any extended period) in which the court of appeals must render judgment runs from the date of entry by the court of appeals of an order granting permission to appeal.


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